(Reuters) -Diageo, the world’s biggest spirits maker, on Tuesday forecast flat fiscal 2026 sales as it raised its estimate of the impact from U.S. tariffs to $200 million per year, and hiked its cost-savings target by about $125 million.
The maker of Johnnie Walker whisky and Smirnoff vodka had previously forecast a $150 million per year hit to operating profit from the tariffs.
Diageo is looking for a new CEO and finance chief to turn around its performance, and guide it through a plan announced in May to cut costs and make substantial asset sales by 2028.
Its industry has been hurt as inflation and economic uncertainty dampen demand in key markets, as some consumers look for alternatives to alcoholic beverages, and as U.S. President Donald Trump’s tariffs disrupt business.
“Macroeconomic uncertainty and the resulting pressure on consumers continues to weigh on the spirits sector,” Diageo said in its first set of results under interim CEO Nik Jhangiani.
Spirits exported to the U.S. from the European Union are subject to a 15% baseline tariff as part of a trade deal agreed last week, though major players including Diageo, Pernod Ricard, Remy Cointreau and Campari are pinning their hopes on exemptions.
Diageo forecast organic sales would fall slightly in the first half of its 2026 financial year – which runs to end-June 2026 – with growth more weighted towards the second half.
Organic sales increased 1.7% in fiscal 2025, beating analysts’ average forecast of 1.4% in a company poll.
The company now expects to save about $625 million under its ‘Accelerate’ programme, including from lower advertising and promotional spend and supply chain efficiencies, up from $500 million previously.
(Reporting by Shashwat Awasthi. Editing by Subhranshu Sahu and Mark Potter)
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